Alex Ogario, head of our Private Office at Knight Frank Finance, explores how to navigate prime lending markets amid a shift in economic confidence.

In recent weeks, the high street banks have made herculean efforts to process a tidal wave of new business as they’ve grappled with the effects of the pandemic. Mortgage approvals for house purchase have surpassed 2007 peaks as homeowners have engaged in a mass rethink about how and where they want to live.

In an attempt to maintain a level of service, lead times have grown and rates have started climbing across all loan-to-value ratios.

Amid all this, the private banks have remained as consistent as ever.

We saw a similar pattern at the onset of the 2008 Global Financial Crisis. Lenders began pulling products off the market on a huge scale and it was the private banks that stayed put, happy to keep lending from strong balance sheets to high net worth individuals.

They’ve been doing a lot of business in a buoyant and busy market. Quarterly price growth returned to the prime central London property market in September for the first time since February this year. Buying a property can take several months and the momentum generated after the market re-opened in May should carry the market right through the current lockdown and into next year.

This has provided fertile ground for some private lenders to lure new UHNW clients and the valuable investment management relationships that can follow. We’ve even seen some private lenders releasing tranches of funding at tracker rates that make the high street banks look expensive.

In cases like these, the private banks are willing to compete on price. That enables us to secure rates for our clients that you won’t find anywhere else.

However, there are now a few signs of strain beginning to show, suggesting timing could become challenging. Just last week, one private bank told me they would no longer process new credit applications until next year while they work through a stack of new applications.

There are lots of reasons to believe prime property markets will get busier, too. A Brexit deal could be imminent and it looks increasing likely that within a few months many people will have access to as many as three highly effective Covid-19 vaccines.

That’ll bring more than just economic confidence. It means domestic buyers that have had prime central London largely to themselves may be joined by competing buyers from across the world as long as distance travel becomes possible once again.

All this means that if you’re considering borrowing to purchase a property, it’s worth locking in the finance as soon as possible. Rates are at or close to record lows and it goes a long way in this market to have the funding secured before you find your property.

Why not get in touch to explore your options.